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Short Cases

Short Cases

CASE 1. Clever, Inc, is a car manufacture. Its 2008 in come statement is as follows:

                                  Clever, Inc. Income Statement For the Year Ended December 31, 2008.

Sales revenue                                                                                                                                                   $20,000

Less cost of goods sold                                                                                                                                   $10,000

Gross margin                                                                                                                                                    $10,000

Expenses                                                                                                                                                             $8,000

Net income                                                                                                                                                         $2,000

Alexander. In is a car rental agency based in Florida. Its 2008 income statement is as follows:

                     Alexander, Inc. Income Statement For the year Ended December 31, 2008

Sales revenue                                                                                                                                                    $20,000

Expenses                                                                                                                                                               15,000

Net income                                                                                                                                                          $5,000

During 2008,both Clever, Inc., and Alexander, In., Incurred a $1,000 fraud loss.

  1. How much additional revenue must each company generate to recover the losses from the fraud
  2. Why are these amounts different&
  3. Which company will probably have to generate less revenue to recover the losses?

CASE 2. You are having lunch with another graduate student. During the course of your conversation you tell your  friend about your  exciting fraud examination class. After you explain the seriousness of  fraud in the in the business world, she asks you two questions.

  1. What is difference between fraud and an innocent error?
  2. With all the advances in technology why is fraud a growing problem? With advanced technology, shouldn’t companies, police, the FBI, and others be able to prevent and detect fraud much more easily.

CASE 3.  For each of the following examples identify  whether it is an employee embezzlement, management fraud, investment scam, vendor fraud customer fraud, or miscellanies fraud.

  1. Marcus bought a $70 basketball for only $30 simply by exchanging the price tags before purchasing the ball.
  2. Craig lost $500 by investing in a multilevel marketing scam.
  3. The bank of San Felipe lost over, $20,000 in 2008. One of its employees took money from a wealthy customer account and put it into his own account.

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FRAUD RELATED CAREERS As the number of frauds and the amounts of fraud losses increase …